You're right familyforce, what you and i are experiencing and what these others are experiencing are two distinct problems. I think they are being confused because they result in the same error message. Just like you, I have had the game up and running (and installed!) since day 1, had downloaded the update 1.05 the day it was put up, and had no problems until about 5 days ago. Now, I get the insufficient free space error message when my game save is on the hard drive and my game data utility file includes the update 1.05. Additionally, if my game save is on the hard drive and I decline the 1.05 update, I can get into GT mode, but once the GT life page loads, the cursor stays as a clock face (as it does when it is doing work), indefinitely.
The theory that museum cards were saved to the game save data and inflated it's size past 4100 K/MB, is pretty plausible. My currently unusable game save data is indeed 4165 K/MB, so perhaps that is it. HOWEVER, don't let these people with the other problem tell you there is a fix for ours, as there IS NOT. I have been emailing back and forth with playstation consumer services for the past 5 days and even they have no idea what I'm talking about.
I also have a bit of a problem with the logic behind the suggested fix for our problem. If the problem is that the game save data file size is too large, and they're suggesting the fix is to delete the game data utility, re-install it, then redownload the update 1.05, how does this shrink the size of my game save?!
Sorry, I'm losing it a bit. I just want to be able to use my save again. And to have everyone with the other problem to stop preaching that our problem's been solved. There's always 1.06 :|